Foreign exchange market intervention and asymmetric preferences |
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| Institution: | 1. Stetson School of Business and Economics (SSBE), Mercer University, 1501 Mercer University Drive, Macon, GA 31207, United States;2. Surveillance Analyst, Cambridge Investment Research Inc., 1776 Pleasant Plain Road, Fairfield, IA 52556, United States;3. Florida Atlantic University, 777 Glades Road, Boca Raton, FL 33431, United States;1. Centre for Financial Risk Macquarie University, Sydney, Australia;2. Southwestern University of Finance and Economics, China;3. Queensland Productivity Commission, Brisbane, Australia;1. University of Strasbourg, Institut d''Etudes Politiques, 47 avenue de la Forêt Noire, 67082 Strasbourg Cedex, France;2. EM Strasbourg Business School, University of Strasbourg, France;3. Moscow State Institute of International Relations (MGIMO University), Russia |
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| Abstract: | Central banks in many emerging market economies intervene in currency markets to mitigate volatility and counter appreciation/depreciation pressure. This paper investigates whether central banks in twenty four emerging economies are “leaning against the wind” in their intervention strategies, whether they have an asymmetric response to exchange rate movements, and whether the response changes after the Global Financial Crisis. Our empirical investigation finds solid evidence that they prefer to dampen appreciation pressures more substantially than depreciation pressures, even after the crisis. |
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